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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1451 Introduced in Senate (IS)]

106th CONGRESS
  1st Session
                                S. 1451

  To amend titles XI and XVIII of the Social Security Act to improve 
          efforts to combat medicare fraud, waste, and abuse.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 28, 1999

   Mr. Harkin (for himself, Mr. Hollings, Mr. Biden, and Mr. Graham) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To amend titles XI and XVIII of the Social Security Act to improve 
          efforts to combat medicare fraud, waste, and abuse.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Waste Tax 
Reduction Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Increased medical reviews and antifraud activities.
Sec. 3. Oversight of home health agencies.
Sec. 4. No markup for drugs or biologicals.
Sec. 5. Ensuring that the medicare program does not reimburse claims 
                            owed by other payers.
Sec. 6. Extension of subpoena and injunction authority.
Sec. 7. Civil monetary penalties for services ordered or prescribed by 
                            an excluded individual or entity.
Sec. 8. Civil monetary penalties for false certification of eligibility 
                            to receive partial hospitalization and 
                            hospice services.
Sec. 9. Application of certain provisions of the bankruptcy code.
Sec. 10. Improving private sector coordination in combatting health 
                            care fraud.
Sec. 11. Fees for agreements with medicare providers and suppliers.
Sec. 12. Increased medicare compliance, education, and assistance for 
                            health care providers.
Sec. 13. Paperwork and administrative hassle reduction.
Sec. 14. Clarification of application of sanctions to Federal health 
                            care programs.
Sec. 15. Payments for durable medical equipment.
Sec. 16. Implementation of commercial claims auditing systems.
Sec. 17. Partial hospitalization payment reforms.
Sec. 18. Expansion of medicare senior waste patrol nationwide.
Sec. 19. Application of inherent reasonableness to all part B services 
                            other than physicians' services.
Sec. 20. Standards regarding payment for certain orthotics and 
                            prosthetics.
Sec. 21. Increased flexibility in contracting for medicare claims 
                            processing.
Sec. 22. Exemption of Inspectors General from Paperwork Reduction Act 
                            requirements.

SEC. 2. INCREASED MEDICAL REVIEWS AND ANTIFRAUD ACTIVITIES.

    (a) In General.--Section 1893(d) of the Social Security Act (42 
U.S.C. 1395ddd(d)) is amended by inserting after paragraph (3) the 
following:
            ``(4) In the case of fiscal year 2000 and each subsequent 
        fiscal year, procedures to ensure that--
                    ``(A) the number of medical reviews, utilization 
                reviews, and fraud reviews in a fiscal year of 
                providers of services and other individuals and 
                entities furnishing items and services for which 
                payment may be made under this title is equal to at 
                least twice the number of such reviews that were 
                conducted in fiscal year 1999;
                    ``(B) the number of provider cost reports audited 
                in a fiscal year is equal to at least--
                            ``(i) 15 percent of those submitted by a 
                        home health agency or a skilled nursing 
                        facility; and
                            ``(ii) twice the number of such reports 
                        that were audited in fiscal year 1999 for those 
                        submitted by any other provider of services or 
                        any other individual or entity furnishing items 
                        and services for which payment may be made 
                        under this title; and
                    ``(C) in determining which providers of services, 
                individuals, entities, or cost reports to review or 
                audit, priority is placed on providers, individuals, 
                entities, and areas that the Secretary determines are 
                subject to abuse and most likely to result in 
                mispayment or overpayment recoveries.''.
    (b) Increase in Appropriated Amounts for Medicare and Medicaid 
Activities.--
            (1) In general.--Section 1817(k)(3)(A)(i) of the Social 
        Security Act (42 U.S.C. 1395i(k)(3)(A)(i)) is amended--
                    (A) in subclause (II)--
                            (i) by striking ``through 2003'' and 
                        inserting ``and 1999''; and
                            (ii) by striking ``and'' at the end;
                    (B) by redesignating subclause (III) as subclause 
                (IV); and
                    (C) by inserting after subclause (II) the 
                following:
                            ``(III) for each of the fiscal years 2000 
                        through 2003, the limit for the preceding 
                        fiscal year, increased by 25 percent; and''.
            (2) Activities.--Section 1817(k)(3)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1395i(k)(3)(A)(ii)) is amended--
                    (A) in subclause (IV), by striking ``not less than 
                $110,000,000 and not more than $120,000,000'' and 
                inserting ``$160,000,000'';
                    (B) in subclause (V), by striking ``not less than 
                $120,000,000 and not more than $130,000,000'' and 
                inserting ``$190,000,000'';
                    (C) in subclause (VI), by striking ``not less than 
                $140,000,000 and not more than $150,000,000'' and 
                inserting ``$230,000,000''; and
                    (D) in subclause (VII), by striking ``not less than 
                $150,000,000 and not more than $160,000,000'' and 
                inserting ``$260,000,000''.
    (c) Increase in Appropriated Amounts for Medicare Integrity 
Program.--Section 1817(k)(4) of the Social Security Act (42 U.S.C. 
1395i(k)(4)(B)) is amended--
            (1) in subparagraph (A), by striking ``such amounts as are 
        necessary to carry out the Medicare Integrity Program under 
        section 1893, subject to subparagraph (B) and to'' and 
        inserting ``the amount appropriated under subparagraph (B), and 
        such amount shall''; and
            (2) in subparagraph (B)--
                    (A) in clause (iv), by striking ``such amount shall 
                be not less than $620,000,000 and not more than 
                $630,000,000'' and inserting ``$780,000,000'';
                    (B) in clause (v), by striking ``such amount shall 
                be not less than $670,000,000 and not more than 
                $680,000,000'' and inserting ``$830,000,000'';
                    (C) in clause (vi), by striking ``such amount shall 
                be not less than $690,000,000 and not more than 
$700,000,000'' and inserting ``$850,000,000''; and
                    (D) in clause (vii), by striking ``such amount 
                shall be not less than $710,000,000 and not more than 
                $720,000,000'' and inserting ``$870,000,000''.

SEC. 3. OVERSIGHT OF HOME HEALTH AGENCIES.

    (a) Validation Surveys of Home Health Agencies.--Section 1891(c) of 
the Social Security Act (42 U.S.C. 1395bbb(c)) is amended by adding at 
the end the following:
    ``(3)(A)(i) The Secretary shall conduct onsite surveys of a 
representative sample of home health agencies in each State, in a 
sufficient number to allow inferences about the adequacies of each 
State's surveys conducted under this subsection.
    ``(ii) A survey described in clause (i) shall be conducted by the 
Secretary within 2 months of the date of the survey conducted by the 
State and may be conducted concurrently with the State survey.
    ``(iii) In conducting a survey described in clause (i), the 
Secretary shall use the same survey protocols as the State is required 
to use under this subsection.
    ``(iv) If, through a State survey, the State has determined that a 
home health agency is in compliance with the requirements specified in 
or pursuant to section 1861(o), this section, or this title, but the 
Secretary determines (after conducting the survey described in clause 
(i)) that the facility does not meet such requirements, the Secretary's 
determination as to the facility's noncompliance with such requirements 
is binding and supersedes that of the State survey.
    ``(B) With respect to each State, the Secretary shall conduct 
surveys under subparagraph (A) each year with respect to at least 5 
percent of the number of home health agencies surveyed by the State in 
the year, but in no case less than 5 home health agencies in the State.
    ``(C) If the Secretary finds, on the basis of such surveys, that a 
State has failed to perform surveys as required under this subsection 
or that a State's survey and certification performance otherwise is not 
adequate, the Secretary shall provide for an appropriate remedy, which 
may include the training of survey teams in the State.
    ``(D) If the Secretary has reason to question the compliance of a 
home health agency with any of the requirements specified in or 
pursuant to section 1861(o), this section, or this title, the Secretary 
may conduct a survey of the agency and, on the basis of that survey, 
make independent and binding determinations concerning the extent to 
which the home health agency meets such requirements.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 4. NO MARKUP FOR DRUGS OR BIOLOGICALS.

    (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)) is amended to 
read as follows:
    ``(o)(1) If a physician's, supplier's, or any other person's bill 
or request for payment for services includes a charge for a drug or 
biological for which payment may be made under this part and the drug 
or biological is not paid on a cost or prospective payment basis as 
otherwise provided in this part, the payment amount established in this 
subsection for the drug or biological shall be the lowest of the 
following:
            ``(A) The actual acquisition cost, as defined in paragraph 
        (2), to the person submitting the claim for payment for the 
        drug or biological.
            ``(B) 83 percent of the average wholesale price of such 
        drug or biological, as determined by the Secretary.
            ``(C) For payments for any drug or biological furnished on 
        or after January 1, 2001, the median actual acquisition cost of 
        all claims for payment for such drug or biological for the 12-
        month period beginning July 1, 1999 (and adjusted, as the 
        Secretary determines appropriate, to reflect changes in the 
        cost of such drug or biological due to inflation, and such 
        other factors as the Secretary determines appropriate).
            ``(D) The amount otherwise determined under this part.
    ``(2) For purposes of paragraph (1)(A), the term `actual 
acquisition cost' means, with respect to such drug or biological, the 
cost of the drug or biological based on the most economical case size 
in inventory on the date of dispensing or, if less, the most economical 
case size purchased within 6 months of the date of dispensing whether 
or not that specific drug or biological was furnished to an individual 
whether or not enrolled under this part. Such term includes appropriate 
adjustments, as determined by the Secretary, for all discounts, 
rebates, or any other benefit in cash or in kind (including travel, 
equipment, or free products). The Secretary shall include an additional 
payment for administrative, storage, and handling costs.
    ``(3)(A) No payment shall be made under this part for any drug or 
biological to a person whose bill or request for payment for such drug 
or biological does not include a statement of the person's actual 
acquisition cost.
    ``(B) A person may not bill an individual enrolled under this 
part--
            ``(i) any amount other than the payment amount specified in 
        paragraph (1) or (4) (plus any applicable deductible and 
        coinsurance amounts), or
            ``(ii) any amount for such drug or biological for which 
        payment may not be made pursuant to subparagraph (A).
    ``(C) If a person knowingly and willfully in repeated cases bills 1 
or more individuals in violation of subparagraph (B), the Secretary may 
apply sanctions against that person in accordance with subsection 
(j)(2).
    ``(4) The Secretary may pay a reasonable dispensing fee (less the 
applicable deductible and coinsurance amounts) for any drug or 
biological to a licensed pharmacy approved to dispense drugs or 
biologicals under this part, if payment for such drug or biological is 
made to the pharmacy.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to drugs or biologicals furnished on or after January 1, 2000.
    (c) Elimination of Report on Average Wholesale Price.--Section 4556 
of the Balanced Budget Act of 1997 is amended by striking subsection 
(c).

SEC. 5. ENSURING THAT THE MEDICARE PROGRAM DOES NOT REIMBURSE CLAIMS 
              OWED BY OTHER PAYERS.

    (a) Information From Group Health Plans.--Section 1862(b) of the 
Social Security Act (42 U.S.C. 1395y(b)) is amended by adding at the 
end the following:
            ``(7) Information from group health plans.--
                    ``(A) Provision of information by group health 
                plans.--The administrator of a group health plan that 
                is subject to the requirements of paragraph (1) shall 
                provide the Secretary with the information described in 
                subparagraph (C) for each individual covered under the 
                plan who is entitled to any benefits under this title. 
                Such information shall be provided in such manner and 
                at such times as the Secretary may specify (but in no 
                case more frequently than 4 times per year).
                    ``(B) Provision of information by employers and 
                employee organizations.--An employer (or employee 
                organization) that maintains or participates in a group 
                health plan that is subject to the requirements of 
                paragraph (1) shall provide to the administrator of the 
                plan the information described in subparagraph (C) for 
                each individual covered under the plan who is entitled 
                to any benefits under this title. Such information 
                shall be provided in such manner and at such times as 
                the Secretary may specify (but in no case more 
                frequently than 4 times per year).
                    ``(C) Information.--The information described in 
                this subparagraph is as follows:
                            ``(i) Elements concerning the individual.--
                                    ``(I) The individual's name.
                                    ``(II) The individual's date of 
                                birth.
                                    ``(III) The individual's sex.
                                    ``(IV) The individual's social 
                                security insurance number.
                                    ``(V) The number assigned by the 
                                Secretary to the individual for claims 
                                under this title.
                                    ``(VI) The family relationship of 
                                the individual to the person who has 
                                current or prior employment status with 
                                the employer.
                            ``(ii) Elements concerning the family 
                        member with current or prior employment 
                        status.--
                                    ``(I) The name of the person in the 
                                individual's family who has current or 
                                prior employment status with the 
                                employer.
                                    ``(II) That person's social 
                                security insurance number.
                                    ``(III) The number or other 
                                identifier assigned by the plan to that 
                                person.
                                    ``(IV) The periods of coverage for 
                                that person under the plan.
                                    ``(V) The employment status of that 
                                person (current or former employee) 
                                during those periods of coverage.
                                    ``(VI) The classes (of that 
                                person's family members) covered under 
                                the plan.
                            ``(iii) Plan elements.--
                                    ``(I) The items and services 
                                covered under the plan.
                                    ``(II) The name and address to 
                                which claims under the plan are to be 
                                sent.
                                    ``(III) The name, address, and tax 
                                identification number of the plan 
                                sponsor.
                            ``(iv) Elements concerning the employer.--
                                    ``(I) The employer's name.
                                    ``(II) The employer's address.
                                    ``(III) The employer identification 
                                number of the employer.
                                    ``(IV) The tax identification 
                                number of the employer if different 
                                than the number in clause (iii)(III).
                    ``(D) Use of identifiers.--The administrator of a 
                group health plan shall utilize a unique identifier for 
                the plan in providing information under subparagraph 
                (A) and in other transactions, as may be specified by 
the Secretary, related to the provisions of this subsection. The 
Secretary may provide to the administrator the unique identifier 
described in the preceding sentence.
                    ``(E) Penalty for noncompliance.--Any individual or 
                entity that knowingly and willfully fails to comply 
                with a requirement imposed by this paragraph shall be 
                subject to a civil money penalty not to exceed $1,000 
                for each incident of such failure. The provisions of 
                section 1128A (other than subsections (a) and (b)) 
                shall apply to a civil money penalty under the previous 
                sentence in the same manner as those provisions apply 
                to a penalty or proceeding under section 1128A(a).
                    ``(F) Group health plan defined.--In this 
                paragraph, the term `group health plan' has the meaning 
                given such term in paragraph (1)(A)(v).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2000.

SEC. 6. EXTENSION OF SUBPOENA AND INJUNCTION AUTHORITY.

    (a) Subpoena Authority.--Section 1128A(j)(1) of the Social Security 
Act (42 U.S.C. 1320a-7a(j)(1)) is amended by inserting ``and section 
1128'' after ``with respect to this section''.
    (b) Injunction Authority.--Section 1128A(k) of the Social Security 
Act (42 U.S.C. 1320a-7a(k)) is amended by inserting ``or an exclusion 
under section 1128,'' after ``subject to a civil monetary penalty under 
this section,''.
    (c) Clarifying Amendments.--
            (1) In general.--Section 1128A(j)(1) of the Social Security 
        Act (42 U.S.C. 1320a-7a(j)(1)) is amended--
                    (A) by inserting ``, except that, in so applying 
                such sections, any reference therein to the 
                Commissioner of Social Security or the Social Security 
                Administration shall be considered a reference to the 
                Secretary or the Department of Health and Human 
                Services, respectively'' after ``with respect to title 
                II''; and
                    (B) by striking the second sentence.
            (2) Authority.--Section 1128A(j)(2) of the Social Security 
        Act (42 U.S.C. 1320a-7a(j)(2)) is amended to read as follows:
    ``(2) The Secretary may delegate to the Inspector General of the 
Department of Health and Human Services any or all authority granted 
under this section or under section 1128.''.
    (d) Conforming Amendment.--Section 1128 of the Social Security Act 
(42 U.S.C. 1320a-7) is amended by adding at the end the following:
    ``(k) For provisions of law concerning the Secretary's subpoena and 
injunction authority with respect to activities under this section, see 
subsections (j) and (k) of section 1128A.''.

SEC. 7. CIVIL MONETARY PENALTIES FOR SERVICES ORDERED OR PRESCRIBED BY 
              AN EXCLUDED INDIVIDUAL OR ENTITY.

    (a) In General.--Section 1128A(a)(1) of the Social Security Act (42 
U.S.C. 1320a-7a(a)(1)) is amended--
            (1) in subparagraph (D)--
                    (A) by inserting ``, ordered, or prescribed by such 
                person'' after ``other item or service furnished'';
                    (B) by inserting ``(pursuant to this title or title 
                XVIII)'' after ``period in which the person was 
                excluded'';
                    (C) by striking ``pursuant to a determination by 
                the Secretary'' and all that follows through ``the 
                provisions of section 1842(j)(2)''; and
                    (D) by striking ``or'' at the end;
            (2) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (3) by adding after subparagraph (D) the following:
                    ``(E) is for a medical or other item or service 
                ordered or prescribed by a person excluded (pursuant to 
                this title or title XVIII) from the program under which 
                the claim was made, and the person furnishing such item 
                or service knows or should know of such exclusion, 
                or''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to claims presented on or after the date of enactment of this 
Act.

SEC. 8. CIVIL MONETARY PENALTIES FOR FALSE CERTIFICATION OF ELIGIBILITY 
              TO RECEIVE PARTIAL HOSPITALIZATION AND HOSPICE SERVICES.

    (a) In General.--Section 1128A(b)(3) of the Social Security Act (42 
U.S.C. 1320a-7a(b)(3)) is amended--
            (1) in subparagraph (A)(ii), by inserting ``, hospice care, 
        or partial hospitalization services'' after ``home health 
        services''; and
            (2) in subparagraph (B), by inserting ``, section 
        1814(a)(7) in the case of hospice care, or section 
        1835(a)(2)(F) in the case of partial hospitalization services'' 
        after ``home health services''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to documents executed on or after the date of enactment of this 
Act.

SEC. 9. APPLICATION OF CERTAIN PROVISIONS OF THE BANKRUPTCY CODE.

    (a) Restricted Applicability of Bankruptcy Stay, Discharge, and 
Preferential Transfer Provisions to Medicare and Medicaid Debts.--Title 
XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by 
inserting after section 1143 the following:

       ``application of certain provisions of the bankruptcy code

    ``Sec. 1144. (a) Medicare- and Medicaid-Related Actions Not Stayed 
by Bankruptcy Proceedings.--The commencement or continuation of any 
action against a debtor under this title, title XVIII, or title XIX 
(other than an action with respect to health care services provided to 
the debtor under title XVIII), including any action or proceeding to 
exclude or suspend the debtor from program participation, assess civil 
money penalties, recoup or set off overpayments, or deny or suspend 
payment of claims shall not be subject to the provisions of section 
362(a) of title 11, United States Code.
    ``(b) Medicare- and Medicaid-Related Debt Not Dischargeable in 
Bankruptcy.--A debt owed to the United States or to a State for an 
overpayment under title XVIII or title XIX (other than an overpayment 
for health care services provided to the debtor under title XVIII), or 
for a penalty, fine, or assessment under this title, title XVIII, or 
title XIX, shall not be dischargeable under any provision of title 11, 
United States Code.
    ``(c) Repayment of Certain Debts Considered Final.--Payments made 
to repay a debt to the United States or to a State with respect to 
items or services provided, or claims for payment made, under title 
XVIII or XIX (including repayment of an overpayment (other than an 
overpayment for health care services provided to the debtor under title 
XVIII)), or to pay a penalty, fine, or assessment under this title, 
title XVIII, or title XIX, shall be considered final and not 
preferential transfers under section 547 of title 11, United States 
Code.''.
    (b) Medicare Rules Applicable to Bankruptcy Proceedings.--Title 
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended by 
adding at the end the following:

           ``application of provisions of the bankruptcy code

    ``Sec. 1897. (a) Use of Medicare Standards and Procedures.--
Notwithstanding any provision of title 11, United States Code, or any 
other provision of law, in the case of claims by a debtor in bankruptcy 
for payment under this title, the determination of whether the claim is 
allowable, and of the amount payable, shall be made in accordance with 
the provisions of this title and title XI.
    ``(b) Notice to Creditor of Bankruptcy Petitioner.--In the case of 
a debt owed to the United States with respect to items or services 
provided, or claims for payment made, under this title (including a 
debt arising from an overpayment or a penalty, fine, or assessment 
under title XI or this title), the notices to the creditor of 
bankruptcy petitions, proceedings, and relief required under title 11, 
United States Code (including under section 342 of that title and 
section 2002(j) of the Federal Rules of Bankruptcy Procedure), shall be 
given to the Secretary. Provision of such notice to a fiscal agent of 
the Secretary shall not be considered to satisfy this requirement.
    ``(c) Turnover of Property to the Bankruptcy Estate.--For purposes 
of section 542(b) of title 11, United States Code, a claim for payment 
under this title shall not be considered to be a matured debt payable 
to the estate of a debtor until such claim has been allowed by the 
Secretary in accordance with procedures under this title.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to petitions filed on or after the date of enactment of this Act.

SEC. 10. IMPROVING PRIVATE SECTOR COORDINATION IN COMBATTING HEALTH 
              CARE FRAUD.

    (a) In General.--Title XI of the Social Security Act (42 U.S.C. 
1301 et seq.) is amended by inserting after section 1157 the following:

``improving private sector coordination in combatting health care fraud

    ``Sec. 1157A. (a) In General.--Notwithstanding any other provision 
of law, no health plan (as defined in section 1128C(c)), issuer of a 
health plan, or employee of a health plan shall be held liable in any 
civil action with respect to the provision of information regarding 
suspected health care fraud, including Federal health care offenses (as 
defined in section 24(a) of title 18, United States Code) to an 
applicable individual unless such information is false and the person 
providing it knew, or had reason to believe, that such information was 
false.
    ``(b) Applicable Individual.--In subsection (a), the term 
`applicable individual' means--
            ``(1) a Federal, State, or local law enforcement official 
        responsible for the investigation or prosecution of suspected 
        health care fraud offenses; or
            ``(2) an employee of a health plan or issuer of a health 
        plan.
    ``(c) Attorney's Fees.--Any health plan, issuer of a health plan, 
or employee of a health plan against whom a civil action is brought, 
and who is found to be entitled to immunity from liability by reason of 
this section, shall be entitled to recover reasonable attorney's fees 
and costs from the person who brought the civil action.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 11. FEES FOR AGREEMENTS WITH MEDICARE PROVIDERS AND SUPPLIERS.

    (a) Fees Related to Medicare Provider and Supplier Enrollment and 
Reenrollment.--Section 1866 of the Social Security Act (42 U.S.C. 
1395cc) is amended by adding at the end the following:
    ``(j) Enrollment Procedures and Fees.--
            ``(1) Enrollment of individuals and entities that are not 
        providers of services.--The Secretary may establish a procedure 
        for enrollment (and periodic reenrollment) of individuals or 
        entities that are not providers of services subject to the 
        provisions of subsection (a) but that furnish health care items 
        or services under this title.
            ``(2) Fees.--
                    ``(A) In general.--The Secretary may impose fees 
                for initiation and renewal of provider agreements under 
                subsection (a) and for enrollment and periodic 
                reenrollment of other individuals and entities 
                furnishing health care items or services under this 
                title under paragraph (1), in amounts up to the full 
                amount which the Secretary reasonably estimates to be 
                sufficient to cover the Secretary's costs related to 
                the process for initiating and reviewing such 
                agreements and enrollments.
                    ``(B) Fees credited to special fund in treasury.--
                Fees collected pursuant to this paragraph shall be 
                credited to a special fund of the United States 
                Treasury, and shall remain available until expended, to 
                the extent and in such amounts as provided in advance 
                in appropriations Acts, for necessary expenses for 
                these purposes, including costs of establishing and 
                maintaining procedures and records systems, processing 
                applications, and conducting background 
                investigations.''.
    (b) Clerical Amendment.--The heading of section 1866 of the Social 
Security Act (42 U.S.C. 1395cc) is amended to read as follows:

``agreements with providers of services and enrollment of other persons 
                         furnishing services''.

SEC. 12. INCREASED MEDICARE COMPLIANCE, EDUCATION, AND ASSISTANCE FOR 
              HEALTH CARE PROVIDERS.

    (a) Development of Plan.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Health and Human Services 
shall, in consultation with health care provider representatives, 
develop and implement a comprehensive plan of activities to--
            (1) maximize health care provider knowledge of medicare 
        program integrity requirements, including anti-fraud and abuse 
        laws and administrative actions;
            (2) assist health care providers with medicare program 
        integrity compliance, including educating such providers 
        regarding compliance activities and procedures of the Health 
        Care Financing Administration and the Inspector General of the 
        Department of Health and Human Services;
            (3) develop improved computer technology for health care 
        providers to both reduce their administrative hassles and 
        facilitate their compliance with medicare program requirements, 
        including physician evaluation and management guidelines; and
            (4) otherwise improve compliance among health care 
        providers with rules and regulations under the medicare 
        program.
    (b) Funding.--Notwithstanding any other provision of law, of the 
amounts appropriated under section 1817(k)(4) of the Social Security 
Act (42 U.S.C. 1395i(k)(4)) for a fiscal year, there shall be made 
available $10,000,000 in fiscal year 2000 and such sums as are 
necessary in fiscal years 2001 through 2004 to carry out the purposes 
of this section.

SEC. 13. PAPERWORK AND ADMINISTRATIVE HASSLE REDUCTION.

    (a) Study by Committee.--
            (1) Establishment.--Not later than 90 days after the date 
        of enactment of this Act, the Secretary of Health and Human 
        Services shall contract with the Institute of Medicine of the 
        National Academy of Sciences to establish a committee to study 
        medicare program administrative requirements that are 
        applicable to health care providers under such program.
            (2) Committee.--The committee described in paragraph (1) 
        shall be composed of--
                    (A) at least 9 health care providers who 
                participate in, and have significant experience working 
                with, the medicare program;
                    (B) experts in paperwork reduction; and
                    (C) beneficiaries under the medicare program or 
                their representatives.
    (b) Recommendations.--The committee described in subsection (a) 
shall develop recommendations regarding how paperwork and 
administrative requirements under the medicare program can be minimized 
in a manner that--
            (1) increases the time health care providers that are 
        subject to such requirements have to spend in direct patient 
        care; and
            (2) maintains medicare program integrity and compliance 
        with anti-fraud and abuse requirements.
In developing such recommendations, the committee shall seek to 
streamline variations in administrative and paperwork requirements 
between the medicare program and other government health programs and 
private health plans.
    (c) Report.--
            (1) In general.--Not later than June 1, 2000, the committee 
        described in subsection (a) shall submit a report to the 
        Secretary of Health and Human Services, the Committees on 
        Finance and Appropriations of the Senate and the Committees on 
        Ways and Means, Commerce, and Appropriations of the House of 
        Representatives.
            (2) Contents.--The report required under paragraph (1) 
        shall contain a detailed description of the matters studied 
        pursuant to subsection (a) and the recommendations developed 
        pursuant to subsection (b), including such legislation and 
        administrative actions as the committee considers appropriate.
    (d) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        $1,000,000 for fiscal year 2000 to carry out the purposes of 
        this section.
            (2) Availability.--Any sums appropriated under the 
        authorization contained in this subsection shall remain 
        available, without fiscal year limitation, until expended.

SEC. 14. CLARIFICATION OF APPLICATION OF SANCTIONS TO FEDERAL HEALTH 
              CARE PROGRAMS.

    (a) Coverage of Employment.--Section 1128 of the Social Security 
Act (42 U.S.C. 1320a-7) is amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1), by inserting ``(including employment under)'' after 
        ``participation in''; and
            (2) in subsection (b), in the matter preceding paragraph 
        (1), by inserting ``(including employment under)'' after 
        ``participation in''.
    (b) Application Under Civil Money Penalty Authority.--Section 1128A 
of the Social Security Act (42 U.S.C. 1320a-7a) is amended--
            (1) in subsection (a)(4), by striking ``program under title 
        XVIII or a State health care program'' and inserting ``Federal 
        health care program'' each place it appears;
            (2) in subsection (a)(5)--
                    (A) by striking ``title XVIII of this Act, or under 
                a State health care program (as defined in section 
                1128(h))'' and inserting ``a Federal health care 
                program''; and
                    (B) by striking ``title XVIII, or a State health 
                care program (as so defined)'' and inserting ``such 
                program'';
            (3) in the last sentence of subsection (a), by striking 
        ``and to direct the appropriate State agency to exclude the 
        person from participation in any State health care program''; 
        and
            (4) in subsection (h), by striking ``State agency or 
        agencies administering or supervising the administration of 
        State health care programs (as defined in section 1128(h))'' 
        and inserting ``Federal or State agency or agencies 
        administering or supervising the administration of any Federal 
        health care program''.
    (c) Application of Waiver Provisions to Federal Health Care 
Programs.--Section 1128 of the Social Security Act (42 U.S.C. 1320a-7) 
is amended--
            (1) in subsection (c)(3)(B), by striking ``upon the request 
        of a State'' and inserting ``upon the request of the director 
        of a Federal health care program'';
            (2) in subsection (d)(3)(B)(i)--
                    (A) by striking ``State health care program'' and 
                inserting ``Federal health care program''; and
                    (B) by striking ``State agency'' and inserting 
                ``Federal or State agency''; and
            (3) in subsection (d)(3)(B)(ii), by striking ``State health 
        care program'' and inserting ``Federal health care program 
        (other than under title XVIII)''.
    (d) Notice Provision Regarding Federal Health Care Programs.--
Section 1128 of the Social Security Act (42 U.S.C. 1320a-7) is 
amended--
            (1) in the heading of subsection (d), by striking ``to 
        State Agencies and Exclusion Under State Health Care 
Programs'' and inserting ``and Exclusion Under Federal Health Care 
Programs'';
            (2) in subsection (d)(1), by striking ``State'' and 
        inserting ``Federal'';
            (3) in subsection (d)(2)--
                    (A) by striking ``State agency'' and inserting 
                ``Federal or State agency'' each place it appears; and
                    (B) by striking ``State health care program'' and 
                inserting ``Federal health care program'' each place it 
                appears;
            (4) in subsection (d)(3)(A), by striking ``State'' and 
        inserting ``Federal''; and
            (5) in subsection (g)(3)--
                    (A) by striking ``State agency'' and inserting 
                ``Federal or State agency''; and
                    (B) by striking ``State health care program'' and 
                inserting ``Federal health care program''.
    (e) Use of Definition of Federal Health Care Program and Treatment 
of Federal Employees Health Benefits Program as a Federal Health Care 
Program.--Section 1128B(f) of the Social Security Act (42 U.S.C. 1320a-
7b(f)) is amended--
            (1) in the matter preceding paragraph (1), by inserting 
        ``and sections 1128 and 1128A'' after ``this section''; and
            (2) in paragraph (1), by striking ``(other than the health 
        insurance program under chapter 89 of title 5, United States 
        Code)''.
    (f) Authority To Exclude From Federal Health Care Programs Based on 
PRO Recommendations.--Section 1156(b)(1) of the Social Security Act (42 
U.S.C. 1320c-5(b)(1)) is amended--
            (1) in the second sentence, by striking ``eligibility to 
        provide services under this Act on a reimbursable basis'' and 
        inserting ``participation in any Federal health care program 
        (as defined in section 1128B(f))''; and
            (2) in the third sentence, by striking ``eligibility to 
        provide services on a reimbursable basis'' and inserting 
        ``participation in such programs''.
    (g) Effective Date.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by this section shall take effect on the date of enactment 
        of this Act.
            (2) Convictions under fehbp.--The amendment made by 
        subsection (e)(2) shall apply, with respect to convictions 
        under the health insurance program under chapter 89 of title 5, 
        United States Code, to convictions that occur on or after the 
        date of enactment of this Act.

SEC. 15. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.

    (a) In General.--Section 1834(a)(1) of the Social Security Act (42 
U.S.C. 1395m(a)(1)) is amended--
            (1) in subparagraph (B)--
                    (A) in clause (i), by striking ``, or'' at the end 
                and inserting a semicolon; and
                    (B) by inserting after clause (ii) the following:
                            ``(iii) the least expensive amount that the 
                        supplier of the item is paid by a 
                        Medicare+Choice organization for such item; or
                            ``(iv) the least expensive amount that the 
                        supplier of the item is paid by any Federal 
                        health care program (as defined in section 
                        1128B(f)) for such item;''; and
            (2) by adding at the end the following:
                    ``(E) Administrative costs.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), if--
                                    ``(I) the payment amount for an 
                                item is covered under clauses (iii) or 
                                (iv) of subparagraph (B); and
                                    ``(II) the Secretary determines 
                                that the administrative costs 
                                associated with billing and receiving 
                                reimbursement from the Secretary for 
                                the item exceeds the administrative 
                                costs associated with providing such 
                                item to a Medicare+Choice organization 
                                or another Federal health care program 
                                (as so defined);
                        then the Secretary shall adjust the payment 
                        rate for such item to reflect such excess.
                            ``(ii) Limitation.--In no case may the 
                        payment rate for an item that is adjusted under 
                        clause (i) exceed the payment rate for such 
                        item determined in clauses (i) and (ii) of 
                        subparagraph (B).
                            ``(iii) Collection of information.--The 
                        Secretary shall collect from durable medical 
                        equipment suppliers that receive reimbursement 
                        under Federal health care programs (as so 
                        defined) such information as the Secretary 
                        determines is necessary in order to make the 
                        determination described in clause (i)(II).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to items provided on or after January 1, 2000.

SEC. 16. IMPLEMENTATION OF COMMERCIAL CLAIMS AUDITING SYSTEMS.

    (a) Commercial Claims Auditing Systems.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary shall require medicare 
        carriers to use commercial claims auditing systems in the 
        processing of claims under part B of the medicare program under 
        title XVIII of the Social Security Act (42 U.S.C. 1395j et 
        seq.) for the purpose of identifying billing errors and abuses.
            (2) Supplement to other technology.--Commercial claims 
        auditing systems required under paragraph (1) shall be used as 
        a supplement to any other information technology used by 
        medicare carriers in processing claims under the medicare 
        program.
            (3) Uniformity.--In order to ensure uniformity in 
        processing claims under the medicare program, the Secretary may 
        require that medicare carriers utilize 1 or more common 
        commercial claims auditing systems, provided that the selection 
        of such system or systems by the Secretary shall be--
                    (A) after due consideration of competing 
                alternative systems; but
                    (B) without regard to any provision of law that 
                requires the use of competitive procedures (as defined 
                in section 4 of the Office of Federal Procurement 
                Policy Act (41 U.S.C. 403)) or the publication of 
                notice of proposed procurements.
            (4) Implementation.--Commercial claims auditing systems 
        required under paragraph (1) shall be implemented by all 
        medicare carriers by not later than 180 days after the date of 
        enactment of this Act.
    (b) Minimum Software Requirements.--Any commercial claims auditing 
system required to be implemented pursuant to subsection (a) shall, at 
a minimum--
            (1) be a commercial item;
            (2) surpass the capability of systems currently used in the 
        processing of claims under part B of the medicare program; and
            (3) be modifiable to--
                    (A) satisfy pertinent statutory requirements of the 
                medicare program; and
                    (B) conform to policies of the Secretary regarding 
                claims processing under such program.
    (c) Disclosure.--
            (1) In general.--Except as provided in paragraph (2), 
        notwithstanding any other provision of law, any information 
        technology (or data related thereto) utilized by medicare 
        carriers in establishing a commercial claims auditing system 
        pursuant to subsection (a) shall not be subject to public 
        disclosure.
            (2) Authorized disclosure.--The Secretary may authorize the 
        public disclosure of the information described in paragraph (1) 
        if the Secretary determines that--
                    (A) release of such information is in the public 
                interest; and
                    (B) the information to be released is not protected 
                from disclosure under section 552(b) of title 5, United 
                States Code.
    (d) Definitions.--In this section--
            (1) Commercial claims auditing system.--The term 
        ``commercial claims auditing system'' means a commercial 
        specialized auditing system that includes edits which identify 
        inappropriately coded health care claims.
            (2) Commercial item.--The term ``commercial item'' has the 
        meaning given such term in section 4 of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 403).
            (3) Information technology.--The term ``information 
        technology'' has the meaning given such term in subparagraphs 
        (A) and (B) of section 5002(3) of the Information Technology 
        Management Reform Act of 1996 (40 U.S.C. 1401(3)), were such 
        information technology to be acquired by an executive agency.
            (4) Medicare carrier.--The term ``medicare carrier'' means 
        an entity that has a contract with the Secretary pursuant to 
        section 1842(a) of the Social Security Act (42 U.S.C. 
        1395u(a)).
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 17. PARTIAL HOSPITALIZATION PAYMENT REFORMS.

    (a) Limitation on Location of Provision of Services.--
            (1) In general.--Section 1861(ff)(2) of the Social Security 
        Act (42 U.S.C. 1395x(ff)(2)) is amended in the matter following 
        subparagraph (I)--
                    (A) by striking ``and furnished'' and inserting 
                ``furnished''; and
                    (B) by inserting ``, and furnished other than in a 
                skilled nursing facility or in an individual's personal 
                residence'' before the period.
            (2) Effective Date.--The amendments made by paragraph (1) 
        shall apply to partial hospitalization services furnished on or 
        after the first day of the third month beginning after the date 
        of enactment of this Act.
    (b) Qualifications for Community Mental Health Centers.--Section 
1861(ff)(3)(B) of the Social Security Act (42 U.S.C. 1395x(ff)(3)(B)) 
is amended by striking ``entity'' and all that follows and inserting 
the following: ``entity that--
            ``(i) provides the mental health services described in 
        paragraph (1) of section 1913(c) of the Public Health Service 
        Act;
            ``(ii) meets applicable licensing or certification 
        requirements for community mental health centers in the State 
        in which it is located; and
            ``(iii) meets such additional standards or requirements as 
        the Secretary may specify to ensure--
                    ``(I) the health and safety of individuals being 
                furnished such services;
                    ``(II) the effective or efficient furnishing of 
                such services (including protecting against fraud, 
                waste, and abuse); and
                    ``(III) the compliance of such entity with the 
                criteria described in such section.''.
    (c) Reenrollment of Providers of CMHC Partial Hospitalization 
Services.--
            (1) In general.--With respect to each community mental 
        health center that furnishes partial hospitalization services 
        for which payment is made under title XVIII of the Social 
        Security Act, the Secretary of Health and Human Services shall 
        provide for periodic recertification to ensure that the 
        provision of such services complies with section 1913(c) of the 
        Public Health Service Act.
            (2) Deadline for first recertification.--The first 
        recertification under paragraph (1) shall be completed not 
        later than 1 year after the date of enactment of this Act.
    (d) Prospective Payment System for Partial Hospitalization 
Services.--
            (1) Establishment of system.--Section 1833 of the Social 
        Security Act (42 U.S.C. 1395l) is amended by inserting after 
        subsection (o) the following:
    ``(p)(1) The Secretary may establish by regulation a prospective 
payment system for partial hospitalization services provided by a 
community mental health center or by a hospital to its outpatients. The 
system shall provide for appropriate payment levels for efficient 
centers and hospitals and take into account payment levels for similar 
services furnished by other efficient entities.
    ``(2) A prospective payment system established pursuant to 
paragraph (1) shall provide for payment amounts for--
            ``(A) the first year in which such system applies, at a 
        level so that, as estimated by the Secretary, the total 
        aggregate payments under this part (including payments 
        attributable to deductibles and coinsurance) for such year are 
        not greater than the total aggregate payments that would have 
        otherwise been made under this part if such system had not been 
        implemented (assuming full implementation of the provisions 
        contained in subsections (a) through (c) of section 17 of the 
        Medicare Waste Tax Reduction Act of 1999); and
            ``(B) each subsequent year, in an amount equal to the 
        payment amount provided for under this paragraph for the 
        preceding year updated by the percentage increase in the 
        Consumer Price Index for all urban consumers (all items; United 
        States city average) for the 12-month period ending with 
        September of that preceding year.''.
            (2) Coinsurance.--Section 1866(a)(2)(A) of the Social 
        Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by adding 
        at the end the following: ``In the case of services described 
        in section 1832(a)(2)(J), clause (ii) of the first sentence of 
        this subparagraph shall be applied by substituting the payment 
        basis established under section 1833(p) for the reasonable 
        charges.''.
            (3) Conforming amendments.--
                    (A) Section 1832(a)(2) of the Social Security Act 
                (42 U.S.C. 1395k(a)(2)) is amended--
                            (i) in subparagraph (B), by striking ``or 
                        subparagraph (I)'' and inserting ``, (I), or 
                        (J)''; and
                            (ii) in subparagraph (J), by striking 
                        ``provided by a community mental health center 
                        (as described in section 1861(ff)(2)(B))''.
                    (B) Section 1833(a) of the Social Security Act (42 
                U.S.C. 1395l(a)) is amended--
                            (i) in paragraph (2) in the matter 
                        preceding subparagraph (A), by striking ``(H), 
                        and (I)'' and inserting ``(H), (I), and (J)'';
                            (ii) in paragraph (8), by striking ``and'' 
                        at the end;
                            (iii) in paragraph (9), by striking the 
                        period at the end and inserting ``; and''; and
                            (iv) by adding at the end the following:
            ``(10) in the case of partial hospitalization services, 80 
        percent of the payment basis under the prospective payment 
        system established under section 1833(p).''.
            (4) Effective date.--The amendments made by paragraphs (2) 
        and (3) apply to services furnished on or after January 1 of 
        the first year that begins at least 6 months after the date on 
        which regulations are issued under section 1833(p) of the 
        Social Security Act (42 U.S.C. 1395l(p)) (as inserted by 
        paragraph (1)).

SEC. 18. EXPANSION OF MEDICARE SENIOR WASTE PATROL NATIONWIDE.

    There are authorized to be appropriated $25,000,000 in fiscal year 
2000, and such sums as are necessary for fiscal years 2001 through 
2003, for the purpose of carrying out, and expanding nationwide, the 
Health Care Anti-Fraud, Waste and Abuse Community Volunteer 
Demonstration Projects conducted by the Administration on Aging 
pursuant to the Omnibus Consolidated Appropriations Act, 1997 (Public 
Law 104-208).

SEC. 19. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B SERVICES 
              OTHER THAN PHYSICIANS' SERVICES.

    (a) Repeal of Certain Provisions of the Balanced Budget Act of 
1997.--
            (1) Repeal.--Section 4316 of the Balanced Budget Act of 
        1997 (Public Law 105-33; 111 Stat. 390), and the amendments 
        made by such section, are repealed effective August 5, 1997.
            (2) Applicability.--Effective August 5, 1997, the Social 
        Security Act shall be applied and administered as if section 
        4316 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 
        Stat. 390), and the amendments made by such section, had not 
        been enacted.
    (b) Application of Inherent Reasonableness to All Part B Services 
Other Than Physicians' Services.--
            (1) In general.--Section 1842(b)(8) of the Social Security 
        Act (42 U.S.C. 1395u(b)(8)) is amended to read as follows:
    ``(8) The Secretary shall describe by regulation the factors to be 
used in determining the cases (of particular items or services) in 
which the application of this part (other than to physicians' services 
paid under section 1848) results in the determination of an amount 
that, because of its being grossly excessive or grossly deficient, is 
not inherently reasonable, and provide in those cases for the factors 
to be considered in establishing an amount that is realistic and 
equitable.''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect August 5, 1997.

SEC. 20. STANDARDS REGARDING PAYMENT FOR CERTAIN ORTHOTICS AND 
              PROSTHETICS.

    (a) Standards.--
            (1) In general.--Section 1834(h)(1) of the Social Security 
        Act (42 U.S.C. 1395m(h)(1)) is amended by adding at the end the 
        following:
                    ``(F) Establishment of standards for certain 
                items.--
                            ``(i) In general.--No payment shall be made 
                        for an applicable item unless such item is 
                        provided by a qualified practitioner or a 
                        qualified supplier under the system established 
                        by the Secretary under clause (iii). For 
                        purposes of the preceding sentence, if a 
                        qualified practitioner or a qualified supplier 
                        contracts with an entity to provide an 
                        applicable item, then no payment shall be made 
                        for such item unless the entity is also a 
                        qualified supplier.
                            ``(ii) Definitions.--In this subparagraph--
                                    ``(I) Applicable item.--The term 
                                `applicable item' means orthotics and 
                                prosthetics that require education, 
                                training, and experience to custom 
                                fabricate such item. Such term does not 
                                include shoes and shoe inserts.
                                    ``(II) Qualified practitioner.--The 
                                term `qualified practitioner' means a 
                                physician or health professional who--
                                            ``(aa) is specifically 
                                        trained and educated to provide 
                                        or manage the provision of 
                                        custom-designed, fabricated, 
                                        modified, and fitted orthotics 
                                        and prosthetics, and is either 
                                        certified by the American Board 
                                        for Certification in Orthotics 
                                        and Prosthetics, Inc., or is 
                                        credentialed and approved by a 
                                        program that the Secretary 
                                        determines, in consultation 
                                        with appropriate experts in 
                                        orthotics and prosthetics, has 
                                        training and education 
                                        standards that are necessary to 
                                        provide applicable items;
                                            ``(bb) is licensed in 
                                        orthotics or prosthetics by the 
                                        State in which the applicable 
                                        item is supplied; or
                                            ``(cc) has completed at 
                                        least 10 years practice in the 
                                        provision of applicable items.
                                    ``(III) Qualified supplier.--The 
                                term `qualified supplier' means any 
                                entity that is--
                                            ``(aa) accredited by the 
                                        American Board for 
                                        Certification in Orthotics and 
                                        Prosthetics, Inc.; or
                                            ``(bb) accredited and 
                                        approved by a program that the 
                                        Secretary determines has 
                                        accreditation and approval 
                                        standards that are essentially 
                                        equivalent to those of such 
                                        Board.
                            ``(iii) System.--The Secretary, in 
                        consultation with appropriate experts in 
                        orthotics and prosthetics, shall establish a 
                        system under which the Secretary shall--
                                    ``(I) determine which items are 
                                applicable items and formulate a list 
                                of such items;
                                    ``(II) review the applicable items 
                                billed under the coding system 
                                established under this title; and
                                    ``(III) limit payment for 
                                applicable items pursuant to clause 
                                (i).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items provided on or after January 1, 2000.
    (b) Revision of Definition of Orthotics.--
            (1) In general.--Section 1861(s)(9) of the Social Security 
        Act (42 U.S.C. 1395x(s)(9)) is amended by inserting 
        ``(including such braces that are used in conjunction with, or 
        as components of, other medical or non-medical equipment when 
        provided by a qualified practitioner (as defined in subclause 
        (II) of section 1834(h)(1)(F))) or a qualified supplier (as 
        defined in subclause (III) of such section)'' after ``braces''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items provided on or after January 1, 2000.

SEC. 21. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS 
              PROCESSING.

    (a) Carriers To Include Entities That Are Not Insurance 
Companies.--Section 1842 of the Social Security Act (42 U.S.C. 1395u) 
is amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1), by striking ``with carriers'' and inserting ``with 
        agencies and organizations (in this section referred to as 
        `carriers')''; and
            (2) by striking subsection (f).
    (b) Secretarial Flexibility in Contracting for and in Assigning 
Fiscal Intermediary and Carrier Functions.--
            (1) In general.--
                    (A) Section 1816(a) of the Social Security Act (42 
                U.S.C. 1395h(a)) is amended to read as follows:
    ``(a)(1) The Secretary may enter into contracts with agencies or 
organizations to perform any or all of the following functions, or 
parts of those functions (or, to the extent provided in a contract, to 
secure performance thereof by other organizations) to--
            ``(A) determine (subject to the provisions of section 1878 
        and to such review by the Secretary as may be provided for by 
        the contracts) the amount of the payments required pursuant to 
        this part to be made to providers of services;
            ``(B) make payments described in subparagraph (A);
            ``(C) provide consultative services to institutions or 
        agencies to enable them to establish and maintain fiscal 
        records necessary for purposes of this part and otherwise to 
        qualify as providers of services;
            ``(D) serve as a center for, and communicate to individuals 
        entitled to benefits under this part and to providers of 
        services, any information or instructions furnished to the 
        agency or organization by the Secretary, and serve as a channel 
        of communication from individuals entitled to benefits under 
        this part and from providers of services to the Secretary;
            ``(E) make such audits of the records of providers of 
        services as may be necessary to ensure that proper payments are 
        made under this part;
            ``(F) perform the functions described by subsection (d); 
        and
            ``(G) perform such other functions as are necessary to 
        carry out the purposes of this part.
    ``(2) As used in this title and title XI, the term `fiscal 
intermediary' means an agency or organization with a contract under 
this section.''.
                    (B) Section 1816(b)(1)(A) of the Social Security 
                Act (42 U.S.C. 1395h(b)(1)(A)) is amended by striking 
                ``after applying the standards, criteria, and 
                procedures'' and inserting ``after evaluating the 
                ability of the agency or organization to fulfill the 
                contract performance requirements''.
                    (C) Section 1816(d) of the Social Security Act (42 
                U.S.C. 1395h(d)) is amended to read as follows:
    ``(d) Each provider of services shall have a fiscal intermediary 
that--
            ``(1) acts as a single point of contact for the provider of 
        services under this part;
            ``(2) makes its services sufficiently available to meet the 
        needs of the provider of services; and
            ``(3) is responsible and accountable for arranging the 
        resolution of issues raised under this part by the provider of 
        services.''.
                    (D) Section 1816(e) of the Social Security Act (42 
                U.S.C. 1395h(d)) is amended to read as follows:
    ``(e) The Secretary, in evaluating the performance of a fiscal 
intermediary, may solicit comments from providers of services.''.
                    (E) Section 1816(f)(1) of the Social Security Act 
                (42 U.S.C. 1395h(f)(1)) is amended to read as follows:
    ``(f)(1) With respect to performance requirements under subsection 
(a), the Secretary may consult with--
            ``(A) Medicare+Choice organizations under part C of this 
        title;
            ``(B) providers of services and other persons who furnish 
        items or services for which payment may be made under this 
        title; and
            ``(C) organizations and agencies performing functions 
        necessary to carry out the purposes of this part.''.
                    (F) Section 1842(b)(2) of the Social Security Act 
                (42 U.S.C. 1395u(b)(2)) is amended--
                            (i) in subparagraph (A)--
                                    (I) by inserting ``(i)'' before 
                                ``No such contract'';
                                    (II) by striking the second 
                                sentence and inserting the following:
    ``(ii) With respect to performance requirements for contracts under 
subsection (a), the Secretary may consult with--
            ``(I) Medicare+Choice organizations under part C of this 
        title;
            ``(II) providers of services and other persons who furnish 
        items or services for which payment may be made under this 
        title; and
            ``(III) organizations and agencies performing functions 
        necessary to carry out the purposes of this part.'';
                                    (III) by striking the third 
                                sentence; and
                                    (IV) by striking the fourth 
                                sentence and inserting the following:
    ``(iii) The Secretary may not require, as a condition of entering 
into a contract under this section or under section 1871, that a 
carrier match data obtained other than in its activities under this 
part with data used in the administration of this part for purposes of 
identifying situations in which section 1862(b) may apply.'';
                            (ii) in subparagraph (B), in the matter 
                        preceding clause (i), by striking ``establish 
                        standards'' and inserting ``develop contract 
                        performance requirements''; and
                            (iii) in subparagraph (D), by striking 
                        ``standards and criteria'' each place it 
                        appears and inserting ``contract performance 
                        requirements''.
            (2) Conforming amendments.--
                    (A) Section 1816(b) of the Social Security Act (42 
                U.S.C. 1395h(b)) is amended--
                            (i) in the matter preceding paragraph (1), 
                        by striking ``an agreement'' and inserting ``a 
                        contract'';
                            (ii) in paragraph (1)(B), by striking 
                        ``agreement'' and inserting ``contract''; and
                            (iii) in paragraph (2)(A), by striking 
                        ``agreement'' and inserting ``contract''.
                    (B) Section 1816(c) of the Social Security Act (42 
                U.S.C. 1395h(c)) is amended--
                            (i) in paragraph (1)--
                                    (I) in the first sentence, by 
                                striking ``An agreement'' and inserting 
                                ``A contract''; and
                                    (II) in the last sentence, by 
                                striking ``an agreement'' and inserting 
                                ``a contract'';
                            (ii) in paragraph (2)(A), in the matter 
                        preceding clause (i)--
                                    (I) by striking ``agreement'' and 
                                inserting ``contract''; and
                                    (II) by inserting ``that provides 
                                for making payments under this part'' 
                                after ``this section'';
                            (iii) in paragraph (2)(C), by striking 
                        ``hospital, rural primary care hospital, 
                        skilled nursing facility, home health agency, 
                        hospice program, comprehensive outpatient 
                        rehabilitation facility, or rehabilitation 
                        agency'' and inserting ``provider of services 
                        (as defined in section 1861(u))''; and
                            (iv) in paragraph (3)(A)--
                                    (I) by striking ``agreement'' and 
                                inserting ``contract''; and
                                    (II) by inserting ``that provides 
                                for making payments under this part'' 
                                after ``this section''.
                    (C) Section 1816(h) of the Social Security Act (42 
                U.S.C. 1395h(h)) is amended--
                            (i) by striking ``An agreement'' and 
                        inserting ``A contract''; and
                            (ii) by striking ``the agreement'' each 
                        place it appears and inserting ``the 
                        contract''.
                    (D) Section 1816(i)(1) of the Social Security Act 
                (42 U.S.C. 1395h(i)(1)) is amended by striking ``an 
                agreement'' and inserting ``a contract''.
                    (E) Section 1816(j) of the Social Security Act (42 
                U.S.C. 1395h(j)) is amended in the matter preceding 
                paragraph (1)--
                            (i) by striking ``An agreement'' and 
                        inserting ``A contract''; and
                            (ii) by striking ``for home health 
                        services, extended care services, or post-
                        hospital extended care services''.
                    (F) Section 1816(k) of the Social Security Act (42 
                U.S.C. 1395h(k)) is amended--
                            (i) by striking ``An agreement'' and 
                        inserting ``A contract''; and
                            (ii) by inserting ``(as appropriate)'' 
                        after ``submit''.
                    (G) Section 1816(l) of the Social Security Act (42 
                U.S.C. 1395h(l)) is amended by striking ``an 
                agreement'' and inserting ``a contract''.
                    (H) Section 1842(a) of the Social Security Act (42 
                U.S.C. 1395u(a)) is amended--
                            (i) in the matter preceding paragraph (1) 
                        (as amended by subsection (a)(1))--
                                    (I) by striking ``carriers with 
                                which agreements'' and inserting 
                                ``single contracts under section 1816 
                                and this section together, or separate 
                                contracts with eligible agencies and 
                                organizations with which contracts''; 
                                and
                                    (II) by striking ``some or all of 
                                the following functions'' and inserting 
                                ``any or all of the following 
                                functions, or parts of those 
                                functions''; and
                            (ii) in paragraph (3), by inserting ``(to 
                        and from individuals enrolled under this part 
                        and to and from physicians and other entities 
                        that furnish items and services)'' after 
                        ``communication''.
                    (I) Section 1842(b) of the Social Security Act (42 
                U.S.C. 1395u(b)(2)(C)) is amended--
                            (i) in paragraph (2)(C), in the first 
                        sentence, by inserting ``(as appropriate)'' 
                        after ``carriers'';
                            (ii) in paragraph (3), in the matter 
                        preceding subparagraph (A), by inserting ``(as 
                        appropriate)'' after ``contract'';
                            (iii) in paragraph (7)(A), in the matter 
                        preceding clause (i), by striking ``the 
                        carrier'' and inserting ``a carrier''; and
                            (iv) in paragraph (11)(A), in the matter 
                        preceding clause (i), by inserting ``(as 
                        appropriate)'' after ``each carrier''.
                    (J) Section 1842(h) of the Social Security Act (42 
                U.S.C. 1395u(h)) is amended--
                            (i) in paragraph (2), in the first 
                        sentence--
                                    (I) by striking ``an agreement'' 
                                and inserting ``a contract''; and
                                    (II) by inserting ``(as 
                                appropriate)'' after ``shall'';
                            (ii) in paragraph (3)(A), by striking ``an 
                        agreement'' and inserting ``a contract'';
                            (iii) in paragraph (3)(B), in the third 
                        sentence, by striking ``agreements'' and 
                        inserting ``contracts'';
                            (iv) in paragraph (5)(A), by inserting 
                        ``(as appropriate)'' after ``carriers''; and
                            (v) in paragraph (8)--
                                    (I) by striking ``an agreement'' 
                                and inserting ``a contract''; and
                                    (II) by striking ``such agreement'' 
                                and inserting ``such contract''.
    (c) Elimination of Special Provisions for Terminations of 
Contracts.--
            (1) Section 1816 of the Social Security Act (42 U.S.C. 
        1395h) is amended--
                    (A) in subsection (b), in the matter preceding 
                paragraph (1), by striking ``or renew'';
                    (B) in subsection (c)(1), in the last sentence, by 
                striking ``or renewing''; and
                    (C) by striking subsection (g).
            (2) Section 1842(b) of the Social Security Act (42 U.S.C. 
        1395u(b)(2)) is amended by striking paragraph (5).
    (d) Repeal of Fiscal Intermediary Requirements That Are Not Cost-
Effective.--Section 1816(f)(2) of the Social Security Act (42 U.S.C. 
1395h(f)(2)) is amended to read as follows:
    ``(2) The contract performance requirements described in paragraph 
(1) shall include--
            ``(A) with respect to claims for services furnished under 
        this part by any provider of services (as defined in section 
        1861(u)) other than a hospital, whether such agency or 
        organization is able to process 75 percent of reconsiderations 
        within 60 days and 90 percent of reconsiderations within 90 
        days; and''.
    (e) Repeal of Cost Reimbursement Requirements.--
            (1) Section 1816(c)(1) of the Social Security Act (42 
        U.S.C. 1395h(c)(1)) is amended--
                    (A) in the first sentence--
                            (i) by striking the comma after 
                        ``appropriate'' and inserting ``and''; and
                            (ii) by striking ``, and shall provide for 
                        payment'' and all that follows before the 
                        period; and
                    (B) by striking the second and third sentences.
            (2) Section 1842(c)(1) of the Social Security Act (42 
        U.S.C. 1395h(c)(1)) is amended--
                    (A) in the first sentence--
                            (i) by striking ``section shall provide'' 
                        and inserting ``section may provide''; and
                            (ii) by striking ``, and shall provide'' 
                        and all that follows before the period; and
                    (B) by striking the second and third sentences.
            (3) Section 2326 of the Deficit Reduction Act of 1984 (42 
        U.S.C. 1395h note) is amended by striking subsection (a).
    (f) Secretarial Flexibility With Respect to Renewing Contracts and 
Transfer of Functions.--
            (1) Section 1816(c) of the Social Security Act (42 U.S.C. 
        1395h(c)) is amended by adding at the end the following:
    ``(4)(A) Except as provided in laws with general applicability to 
Federal acquisition and procurement or in subparagraph (B), the 
Secretary shall use competitive procedures when entering into contracts 
under this section.
    ``(B)(i) The Secretary may renew a contract with a fiscal 
intermediary under this section from term to term without regard to 
section 5 of title 41, United States Code, or any other provision of 
law requiring competition, if the fiscal intermediary has met or 
exceeded the performance requirements established in the current 
contract.
    ``(ii) Functions may be transferred among fiscal intermediaries 
without regard to any provision of law requiring competition. However, 
the Secretary shall ensure that performance quality is considered in 
such transfers.''.
            (2) Section 1842(b)(1) of the Social Security Act (42 
        U.S.C. 1395u(b)(1)) is amended to read as follows:
    ``(b)(1)(A) Except as provided in laws with general applicability 
to Federal acquisition and procurement or in subparagraph (B), the 
Secretary shall use competitive procedures when entering into contracts 
under this section.
    ``(B)(i) The Secretary may renew a contract with a carrier under 
subsection (a) from term to term without regard to section 5 of title 
41, United States Code, or any other provision of law requiring 
competition, if the carrier has met or exceeded the performance 
requirements established in the current contract.
    ``(ii) Functions may be transferred among carriers without regard 
to any provision of law requiring competition. However, the Secretary 
shall ensure that performance quality is considered in such 
transfers.''.
    (g) Year 2000 Compliance.--
            (1) Section 1816(f)(2) of the Social Security Act (42 
        U.S.C. 1395h(f)(2)) (as amended by subsection (d)) is amended 
        by adding at the end the following:
            ``(B) a requirement that, by such time as the Secretary 
        considers reasonable, the information technology that is used 
        or acquired by the agency or organization to carry out its 
        responsibilities under this title (to the extent that the 
        Secretary finds such information technology is under the 
        control of such agency or organization)--
                    ``(i) meets the definition of `Year 2000 compliant' 
                under the Federal Acquisition Regulation (concerning 
                accurate processing of date and time data (including 
calculating, comparing, and sequencing) from, into, and between the 
20th and 21st centuries, and the years 1999 and 2000 and leap year 
calculations) but without regard to whether the information technology 
is being acquired; and
                    ``(ii) meets such other criteria for Year 2000 
                compliance as the Secretary considers appropriate.''.
            (2) Section 1842(b)(2)(A)(i) of the Social Security Act (42 
        U.S.C. 1395u(b)(2)(A)(i)) (as amended by subsection (b)(1)(F)) 
        is amended by striking the period and inserting ``, including a 
        requirement that, by such time as the Secretary considers 
        reasonable, the information technology that is used or acquired 
        by such carrier to carry out its responsibilities under this 
        title (to the extent that the Secretary finds such information 
        technology is under the control of such carrier) meets--
            ``(I) the definition of `Year 2000 compliant' under the 
        Federal Acquisition Regulation (concerning accurate processing 
        of date and time data (including calculating, comparing, and 
        sequencing) from, into, and between the 20th and 21st 
        centuries, and the years 1999 and 2000 and leap year 
        calculations) but without regard to whether the information 
        technology is being acquired; and
            ``(II) such other criteria for Year 2000 compliance as the 
        Secretary considers appropriate.''.
    (h) Waiver of Competitive Requirements for Initial Contracts.--
Contracts that have periods that begin before or during the 1-year 
period that begins on the first day of the fourth calendar month that 
begins after the date of enactment of this Act may be entered into 
under section 1816(a) or 1842(a) of the Social Security Act (42 U.S.C. 
1395h(a) and 1395u(a)) without regard to any provision of law requiring 
use of competitive procedures.
    (i) Effective Dates.--
            (1) The amendments made by subsection (c) apply to 
        contracts that have periods ending on or after the end of the 
        third calendar month that begins after the date of enactment of 
        this Act.
            (2) The amendments made by subsections (a), (b), (d), and 
        (e) apply to contracts that have periods beginning after the 
        third calendar month that begins after the date of enactment of 
        this Act.
            (3) The amendments made by subsection (f) apply to 
        contracts that have periods that begin after the end of the 1-
        year period specified in paragraph (1) of this subsection.
            (4) The amendment made by subsection (g) shall take effect 
        on the date of enactment of this Act.

SEC. 22. EXEMPTION OF INSPECTORS GENERAL FROM PAPERWORK REDUCTION ACT 
              REQUIREMENTS.

    (a) In General.--Chapter 35 of title 44, United States Code, is 
amended by inserting after section 3502 the following:
``Sec. 3502a. Exemption of any Office of Inspector General
    ``This chapter shall not apply with respect to any Office of 
Inspector General established within an agency under the Inspector 
General Act of 1978.''.
    (b) Table of Contents Amendment.--The table of contents of chapter 
35 of title 44, United States Code, is amended by adding after the item 
relating to section 3502 the following new item:

``3502a. Exemption of any Office of Inspector General.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.
                                 <all>
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